Tapping the potential of the Russian market

(VEN) - As a traditional market for Vietnam and home to a large number of Vietnamese people, Russia has become a potential market for Vietnamese businesses. However, trade between Vietnam and Russia has so far failed to match its potential.

Bilateral trade doubled in 2008-2012, an average growth of 28 percent per year. It came to almost US$2.76 billion in 2013 (up 12.61 percent from 2012), including US$1.91 billion worth of Vietnam’s exports to Russia and US$0.85 billion worth of Russian exports to Vietnam.

Vietnam’s major exports to Russia included farm produce, seafood, textiles, garments, leather and footwear, fine art and handicraft articles, processed foods, and construction materials. Russia assisted and satisfied the demand for materials and equipment of Vietnam’s important industries such as energy, mining and construction. Russia’s traditional exports to Vietnam, including oil and gas, energy, iron and steel, fertilizers, artificial rubber, means of transport and paper of different types, grew on a stable basis.

Bank for Investment and Development of Vietnam (BIDV) Chairman Tran Bac Ha said that the signing of a free trade agreement (FTA) between Vietnam and the Customs Union of Russia, Belarus and Kazakhstan is expected to make bilateral trade to increase to US$12 billion in 2018, triple that in the 2008-2012 period. Russia will continue to be an important market for Vietnam as it loves consumer goods from Asian countries and does not have strict quality requirements. The fact that Russia wants to promote bilateral trade with Vietnam and Asian countries in the context of political intensions between Russia and Europe and the US is opening up export opportunities for Vietnamese businesses, Ha said.

At a seminar promoting investment and trade in Russia sponsored by BIDV in coordination with the Ministry of Industry and Trade and the Ho Chi Minh City People's Committee in late August 2014, many practical solutions to promote investment and trade in Russia were introduced by economists, managers and businesses from different fields. Economists believed that there should be specific plans for market research and survey and product advertising to boost exports to the Russian market.

A comprehensive cooperation agreement will be signed by Ho Chi Minh City and Moscow in the near future. BIDV, in coordination with the Vietnam National Textile and Garment Group (Vinatex) worked with Moscow and Russian partners to kick off a project to develop a light industrial zone for production of consumer goods in Moscow. In the coming time, Vietnamese and Russian investors will expand cooperation in wood and farm produce and forest product processing in Russia and in automobile assembly and quarrying in Vietnam. The Hanoi-Moscow Trade Centre Investment Joint Stock Company (INCENTRA) promises to be a sustainable, safe bridge for Vietnamese enterprises upon investment in Russia.

Seminar participants proposed that the government approve a policy to promote investment and trade in Russia, paving the way for increasing sales of Vietnamese products, including textiles and garments, leather and footwear, wood and wood products, farm produce and seafood, electronic components and telephones, in Russia.

Ha said he hoped that Vietnamese and Russian governments will early approve a local currency-based bilateral netting policy to minimize risks, limit the impact of embargos and support payments for businesses from the two countries; it is necessary to early establish an Association of Vietnam Investors in Russia (AVIR) to help Vietnamese businesses seek investment opportunities and expand investment scale in Russia and organize investment promotion activities to connect businesses from the two countries./.